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Heard on the private equity fundraising trail. Part II

Following up on my last post, here is Part II of standardized LP questions, statements, and “feedback”.

Do you offer co-investments?

Some LPs are very genuine in this regard. But more than extra upside and averaging down on fees, many LPs simply really really want to be GPs. Co-investments (CI) allow them to pretend they are – and maybe even argue for carry in their own organizations.

Frustratingly for GPs who subsequently offer these LPs CI, many, even those with very deep pockets, don’t have the institutional set-up or the experience to handle the process, and never actually get there when asked.

And for those who do invest, it will often rationalized as “investing with smart money”. I.e. we invested with the GP and obviously co-investment cannot then go wrong. If things turn adverse, these investors are likely to panic and, should the need arise, won’t have the ability to support an investment with more equity.

Though a way to entice a certain segment of LPs to commit to a fund, GPs should be very alert to the motivation and actual capabilities of LPs, regardless of check size, for CI.

What do you think of Fund XYX?

This one from Rehan Yar Khan at #Orios (Good one!), and I would think for the GP at least as toe-curling as when GPs disparage their competitors in front of LPs – see here.

What exactly are you meant to respond to this, and what does the LP want out of this question?

Here one cannot help but wonder if the LP is doing due diligence on Fund XYX and if asking for a formal reference would not be better.

At times, commitments are possibly just this random!

Fund manager selection

Who are your competitors?

The very next question from “What do you think of Fund XYX?”, and, even if a sincere and relevant question, almost as awkward. If the GP does not know this, and potentially claims none – see here – it is not very credible. And if the LP does not know, or at the very least has a very good idea, the LP needs to do their homework, and should in the meantime probably pause investing!

For the GP that does get asked, and many will, this is a chance to position and differentiate oneself. Just make sure to do so without disparaging the competition!

That sounds (very) interesting – followed by drawn out awkward silence

Often said after a very one-way meeting where the GP has done most, if not all, of the talking.

Though (hopefully) analysts at heart, and thus on average a bit introvert than most, LPs are generally quite passionate and excitable about what they do and want to / need to engage.

Thus, unless a GP is facing the LP equivalent of a poker world champion, this is with a very high probability either a “tell” that the LP has not really listened. Or a polite way of saying no – just not having solid arguments of why or simply not wanting to say no directly.

In any case, this is probably not a good meeting for the GP. The best path forward is asking some open-ended questions along the lines of “how would it fit to your strategy?”. And maybe getting some useful feedback and potentially open the conversation.

Nothing, just awkward silence…

Much worse than “That sounds “very” interesting”. Potentially the LP has fallen asleep (this has been known to happen – even before all meetings went virtual). Or potentially the LP just has nothing to say – this only very rarely because they have been completely blown away by the pitch.

Hard to recover from and the best option is to try to ask some closed-ended questions, “Is this interesting to you?”, to get some feedback, or at least ascertain whether the person is sleeping!


There are a lot of bad pitch meetings and while GPs, Placement Agents, and LPs can do much to prepare for meetings, and make them better / of higher quality, reality is that it is often not done.

More on how to do this better in another post.

Stay illiquid!


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